Continental signs €4bn ContiTech sale to Lone Star, pivoting to pure tires
Continental AG has signed a deal to sell its ContiTech industrial unit to US investor Lone Star Funds for €4 billion, plus up to €250 million in earn-outs, completing its shift to a pure tire maker.
Deal signed after months of negotiations
Continental AG signed a purchase agreement on July 4 to sell its ContiTech industrial unit to US private equity firm Lone Star Funds. The deal values ContiTech at €4 billion, with an additional earn-out of up to €250 million if the business outperforms expectations in the coming years. The signing follows a board and supervisory board approval on July 3, when Continental confirmed it was in the final stages of negotiations. A binding agreement had not yet been reached at that point, but the companies moved quickly to finalise terms.
What ContiTech does and why it's being sold
ContiTech manufactures rubber and plastic products for industrial applications, including conveyor belts and air springs. The division employs more than 20,000 people worldwide, with around 7,700 in Germany. Continental is selling the unit to refocus on its core tire business, becoming a pure-play tire manufacturer. The division has faced pressure, and in May Continental announced 3,000 job cuts (1,600 of them in Germany) aiming to reduce annual costs by €150 million from 2028.
Financial details and shareholder returns
Continental expects a cash inflow of approximately €3.1 billion from the transaction. The company plans to use the proceeds to reduce its financial debt and return around €2.5 billion to shareholders, either through a special dividend or a combination of share buybacks and a special dividend. The final financial effects will depend on customary closing adjustments. Continental is also reviewing the impact of the deal on its current-year forecast and will update it later; the outlook for the Tires division remains unchanged.
Timeline and regulatory hurdles
The deal is subject to regulatory approvals, particularly antitrust clearance, and is expected to close by the end of 2026. Continental originally sought a price above €5 billion, according to people familiar with the matter, but settled for the €4 billion valuation. The transaction was first reported by Börsen-Zeitung. Lone Star had no immediate comment when approached by Reuters on July 3.
- Continental confirms final-stage negotiations and board approval; no binding agreement yet.
- Purchase agreement signed with Lone Star Funds at €4 billion enterprise value.
- Expected closing, subject to regulatory approvals.
